Reliance Jio and Apple Collaboration - Tradeoffs

Apple new series of iPhone7 and other product hit Indian market. Based on the ground reports, there is lots of optimism within young generation to own iPhone 7 series. In order to attract buyers, Apple recently reduced the price of iPhone 6 and SE series prices. Generally Apple new launches canabilize it's own running model. In the absence of Samsung Galaxy Note 7, it is expected that Apple will perform very well as the lowest configuration iPhone 7 price is around $900 which is very competitive given the segment Apple is targeting. I consider iPhone device user as prosumer and HNI.

In order to increase its marketshare Apple and Reliance Jio joined hand wherein user will get every service of Reliance jio, 20 GB of data, WiFi data, free voice calling, Reliance digital life worth $280.

New buyer may consider that they will be getting iPhone 7 in $700 in totality.

Reliance jio after acquiring around 15 million users are gunning for high networth user who can generate higher ARPU for them. They are also gunning for those users who will be using their service more. The move is really good when it comes to user acquisition strategy but carry the tradeoff. Reliance will not be getting any revenue for next 15 month and generally high networth user carry a tendency to carry the latest device and very particular about their data and privacy. The device owner will be forced to download the number of Reliance jio applications to avail services. For example Apple user most commonly use Facetime to get connected with their family members to friends as the video and audio quality of facetime is very good. Reliance jio also promoted jiochat and that is going to irritate device user.

In the contrary, Apple generate high ARPU from their software service. Offering Reliance Jio SIM is going to kill their software services revenue as Reliance is offering every component of digital life. I take an example that Apple offer music services and generate good revenue through that whereas Reliance jio also offer more than 10 million songs.

In my point of view, Apple strategy to tap in Reliance to ride the wave of Reliance jio minia to get higher adoption and higher shelf presence whereas Reliance cost of user acquisition will be very high without any guarantee that iPhone user will stick to them post expiry of welcome offer after 15 months. In my point of view, Apple is the gainer and Reliance will be the big loser.

About
Devendra Prasad

20 years plus industry veteran of domestic and international ICT domain with the expertise in Business, Technology, Strategy and Analysis. Specializes in forecasting impact analysis, trends and recommendations for Investments, Technology and Regulations.